Business Standard
BS Reporter / Mumbai December 06, 2006

Ispat Industries today announced that it would invest Rs 2,000 crore to scale up capacity to 5 million tonne a year (mty) from the existing 3 mty at its integrated steel plant in Dolvi in Maharashtra. The expansion is expected to be over in one-and-a-half years.

A memorandum of understanding was signed today with the state government in this regard at Nagpur.

A second blast furnace, a coke oven plant and a new slab caster will be added to the existing facility in the project.

Ispat Industries managing director Vinod Mittal said the company would further increase the capacity to 10 mty in 2011-12.

The Pramod and Vinod Mittal-controlled steel company has so far invested Rs 10,000 crore in the Dolvi unit.

The Maharashtra government will also facilitate the company’s requirement of iron ore mines while the Maharashtra Industrial Development Corporation will act as a single window clearance agency for various infrastructure requirements of the expansion project.

Mittal said the company was open to setting up manufacturing units in other states if it would get assured mining rights.

The Ispat group operates and manages about 14 mt of steel-making capacity in various parts of the world, including 3.5 mty in India.

The group operates and manages steel-making and processing capacities through ownership, long-term concessions or commercial contracts in Bulgaria (2.2 mt), Nigeria (Delta Steel and Ajaokuta Steel Company 4 mt combined), Libya (1.8 mt), The Philippines (3 mt) and India (3.5 mt).

The Telegraph

New Delhi, Dec. 5 (PTI): Ispat Industries Ltd today announced an investment of over Rs 8,000 crore in expanding its steel-making capacity in sync with major acquisition and expansion drive by Indian steel manufacturers.

As part of the first-phase expansion the company would invest Rs 2,000 crore to raise steel-making capacity of its Dolvi plant in Maharashtra to 5 million tonnes from 3 million tonnes, Ispat said in a statement here.

As part of its effort to consolidate its position, Ispat, will in subsequent phases, invest another Rs 6,000 crore to double the capacity to 10 million tonnes.

To kickstart the Phase I of expansion Ispat signed a memorandum of understanding with Maharashtra government to expand capacity at its Dolvi plant, which was set up at an investment of over Rs 10,000 crore.

“Expected Phase I project completion will be in 18 months from the commencement of work,” the statement said.

According to its expansion plans, the company will install second blast furnace, a coke oven plant and a new slab caster at its existing facility in Dolvi, the release said.

The Hindu Business Line

MUMBAI: Ispat Industries Ltd on Wednesday said it has signed a pact with the Maharashtra state government, which will allow the company to expand the steel making capacity of its Dolvi plant in the state.

Ispat Industries will invest Rs 2,000 crore in expanding the plant's capacity to five million metric tonnes a year from three million tonnes a year at present.

In a notice to the stock exchange, the company said the move is expected to provide direct and indirect employment to about 10,000 persons. The company said implementation of the expansion would begin after it receives all the requisite approvals.

The Financial Express
Posted online: Tuesday, December 05, 2006 at 1958 hours IST

NEW DELHI, DECEMBER 5: Ispat Industries Ltd announced an investment of over Rs 80 bn in expanding its steel making capacity in sync with major acquisition and expansion drive by Indian steel manufacturers.

As part of the first phase expansion the company would invest Rs 20 bn for raising steel making capacity of its Dolvi plant in Maharashtra to 5 million tonnes from 3 million tonnes now, Ispat said in a statement.

As part of its effort to consolidate its position, Ispat would in subsequent phases invest another Rs 60 bn to double the capacity to 10 million tonnes.

To kick start the Phase I of expansion Ispat signed a memorandum of understanding with Maharashtra government to expand capacity at its Dolvi plant, which was set up at an investment of over Rs 100 bn.

The Hindu Business Line
New Delhi , Oct. 19

Ispat Industries Ltd (IIL) has reported a net profit of Rs 2.32 crore for the second quarter ended September 30, 2006, as against a net loss of Rs 363.01 crore in the same quarter last fiscal, according to a company release.

The company's earnings before interest, depreciation and taxes (EBIDTA) during the July-September 2006 quarter stood at Rs 406.03 crore as against a negative EBIDTA of Rs 149.66 crore in the corresponding period of the previous fiscal.

IIL's total income for the quarter at Rs 1,892.71 crore is up by 54 per cent compared with the corresponding quarter of 2005-06, the release added.

In the first six-month period of 2006-07, the EBIDTA of the company has increased by 712 per cent to Rs 695.65 crore from Rs 85.72 crore in the corresponding period last fiscal.

According to the company managing Director, Mr Vinod Mittal, "The benefits from the 2.24-million tonne per annum sinter plant and 1,260 TPD oxygen plant, coupled with our continuous cost efficiency efforts and better sales realisations have helped the company to achieve improved financial performance during the quarter."

During the first half of the current fiscal, production of hot-rolled steel stood at around 1.27 mt as against 0.95 mt in the first half of 2005-06.

Indian Express

Domestic steel maker Ispat Industries on Thursday reported a turnaround in its profitability as a result of increased sales and cost efficiency efforts. The company posted a net profit of Rs 2.32 crore for the quarter ended September 30, as compared to a loss of Rs 363.01 crore for the corresponding quarter last year.

Business Standard

Ispat Industries is back in the black. The integrated steel-maker has posted a net profit of Rs 2.32 crore for the quarter ended September 30 as against a net loss of Rs 363.01 crore for the corresponding quarter last year.

Ispat’s net income for the quarter grew 54 per cent to Rs 1,892.71 crore from Rs 1,232.18 crore in the same period last year.
Vinod Mittal, managing director, Ispat, said, “The benefits from the 22.4 lakh tonne sinster plant and 1,260 TDP oxygen plant, coupled with our continuous cost efficiency efforts and better sales realisation have helped the company to achieve improved financial performance during the quarter.”

The company’s earnings before interest, depreciation and taxes (EBIDTA) during the quarter stood at Rs 406.03 crore as against a negative EBIDTA of Rs 149.66 crore last year.

The Economic Times
PTI[ THURSDAY, OCTOBER 19, 2006 10:00:11 AM]

MUMBAI: Domestic steel maker Ispat industries Ltd on Thursday reported a net profit of Rs 2.32 crore for the quarter ended September 30, as compared to a net loss of Rs 363.01 crore for the corresponding quarter last year.

Total income (net of excise) increased 53.60 per cent to Rs 1892.71 crore for the second quarter during 2006-07 from Rs 1232.18 crore during the same quarter a year-ago, the Kolkata-based company informed the bombay stock exchange.

The Financial Express

Ispat Industries Ltd (IIL) has reported a net profit of Rs 2.32 crore for the second quarter ended September 30, 2006, as against a net loss of Rs 363.01 crore for the corresponding quarter of the previous fiscal. IIL’s total income for the quarter at Rs 1,892.71 crore is up by 54% compared to the corresponding quarter of 2005-06, a release from the company said.

Hindustan Times

Domstic steel maker Ispat Industries Ltd reported a net profit of Rs. 2.32 crore for the quarter ended September 30, as compared to a net loss of Rs.363.01 crore last year.

Business Standard
BS Reporter / Kolkata August 30, 2006

Ispat Industries is in the process of tying up its raw material linkages and, as a step in the direction, is planning to set up a 3 mt pellet plant in Vizag, likely to cost around Rs 900 crore.

Speaking on the sidelines of the company’s annual general meeting, Pramod Mittal, chairman, Ispat Industries, disclosed that a special purpose vehicle would be set up for the project and Ispat would be one of the sponsors. The project would be ready in two-and-a-half years from the zero date, he added.

Earlier, addressing shareholders, Mittal pointed out that one of the disadvantages before the company is raw materials spread in far-off areas. He, however, added that the advantage is the proximity to markets.

Commenting on the proposed pellet plant, Mittal said the company would process the raw materials and then transport them to Mumbai. Ispat Industries is looking at increasing the capacity of its Dolvi plant beyond 3.6 mt, he added.

Ispat had also applied to different state governments for iron ore mines. Mittal refused to mention the states, but said that applications had been made.

The company is seeking to integrate some of its core activities with the widespread network of its holding company, Global Steel Holdings.

Mittal noted that operational integration would help Ispat in terms of input price advantages, freight cost benefits, hedging and minimising risks.

He elaborated that Global Steel is a bigger buyer in the market and the integration would lead to optimisation of cost. Global Steel manages more than 14 mt, including Ispat Industries.

Mittal added that he was talking to the government on the iron ore policy. “The first choice should be the existing plants. Ispat has to import pellets from other countries,” he said.

The captive power plant of Ispat Energy, with a combined capacity of 110 mw, would be commissioned next month. Financial closure has been achieved and the project would be ready in fifteen months.

The Economic Times
PTI[ TUESDAY, AUGUST 29, 2006 03:40:23 PM]

KOLKATA: P K Mittal and V K Mittal promoted Ispat Industries Ltd (IIL) would set up an iron ore pellet plant at Visakapatnam.

"We have firmed up plans for an iron ore pellet plant at Vizag with a capacity of two to three million tonnes. We are negotiating for foreign technology and we will shortly finalise the technology partner," Ispat Chairman P K Mittal told reporters today after the 21st AGM here.

Asked about the cost of the project, Mittal said that the company was working on it, the details of which were yet to be finalised.

A company official, however, said that the three million iron ore pellet capacity plant would cost around Rs 800 crore and the project would be completed in 30 months from the zero date.

The project would be promoted through a SPV, but its financial details were yet to be firmed up.

Speaking about the proposed Foreign Currency Convertable Bonds (FCCB) issue, Mittal said that the instrument would be issued at the right time. The company board has cleared the FCCB.

IIL might also enter a mining venture with the initial target of captive consumption.

"We have formally submitted for iron ore mines with a few state governments, but I cannot reveal names," Mittal said. He also declined to give details about the mining lease proposals.

Mittal said that Ispat was targeting expansion of capacity beyond 3.6 million tonne during the years to come.

"We have already achieved capacity of three million tonne with 85 per cent capacity utilisation. This could easily be increased to 3.6 million tonnes. And, later we will look forward to expand further," Mittal said.

The total global capacity of Ispat Global was 14 million tonne.

The company hoped to do better during the current fiscal as the steel market was firming up and had projected a profit against loss last year.

Meanwhile, in order to reduce the power cost, IIL was promoting a captive power plant of 110 MW at an expenditure of Rs 350 crore.

To take SPV route; in talks with States for iron ore mine leases

The Hindu Business Line
Kolkata , Aug. 29

--------------------------------------------------------------------------------
Turnaround plan
As part of its strategy to facilitate a turnaround, Ispat Industries was looking at expanding the steel making capacity at its Dolvi plant to beyond the existing level of 3.6 million tonnes.
--------------------------------------------------------------------------------

Ispat Industries Ltd has decided to take the Special Purpose Vehicle (SPV) route to set up a three-million-tonne per annum capacity pelletisation plant in Vizag.

Details of investments and other technical issues were being looked into, Mr Pramod Mittal, Chairman of Ispat Industries Ltd, told newspersons at the conclusion of the company's 21st annual general meeting held here on Tuesday.

"Ispat Industries will be one of the sponsors of the proposed pelletisation plant," Mr Mittal said, adding that the structure of the proposed entity under which the pelletisation plant would be set up was yet to be finalised. The investment required for setting up the proposed plant would be firmed up after the detailed engineering study is completed. The plant will commence production two-and-a-half years from zero date. Raw material linkages, however, has been firmed up.

According to Mr Mittal, the company has approached a few state governments with requests for iron ore mining leases. As part of its strategy to facilitate a turnaround, Ispat Industries was looking at expanding the steel making capacity at its Dolvi plant to beyond the existing level of 3.6 million tonnes. It was also open to the idea of setting up greenfield ventures closer to raw material sources. It was also focusing on security for sourcing key steel making consumables like ferro alloys, refractories, magnesite, steel rolls, etc.

In the year ended March 31, 2006, Ispat Industries notched a total income of Rs 5,010.73 crore compared with Rs 6,112.89 crore the previous year. The company registered a net loss of Rs 812.67 crore in 2005-06 against a net profit of Rs 696.06 crore in 2004-05.

Mr Mittal refused to hazard a guess on how much time the company would take to wipe out its losses. All he said was that it was "redeeming" that the conditions in the global steel scenario were on the upswing since the beginning of the current fiscal.

The Telegraph
Calcutta, Aug. 29:

Ispat Industries plans to scale up its steel-making capacity to about 5 million tonnes in the next two years.

The Pramod and Vinod Mittal-controlled company, with a plant at Dolvi near Mumbai, has a 3-million-tonne capacity. This would go up to 3.6 million tonnes through a de-bottlenecking exercise in the next few months.

Ispat chairman P.K. Mittal said the company would commission another electric arc furnace to hike capacity.

This would increase Ispat’s installed capacity to 4.8 million tonnes.

However, it may not be possible for the company to reach that level of production without putting in place the necessary forward and backward integration.

It is now working on the details of the plants and machinery required for processing the steel and also the raw material linkage to produce it. Investment in the entire project is also being worked out.

As a step towards that, Ispat is planning to set up a pellet plant on the east coast.

Speaking on the sidelines of the annual general meeting of the company in the city today, Mittal, younger brother of steel baron Laxmi Niwas Mittal, said the pellet plant would have a 3-million-tonne capacity.

It would be located in Vishakhapatnam to take advantage of the port facility. The investment in the project could be Rs 800 crore and completed within 30 months from the zero date.

In the absence of any captive mines, pelletisation helps reign in the cost of production.

To make pellets, which go into steel making, ore fines are used instead of lumps, which are costlier among the two.

Ispat will bring pellets from there to its plant near Mumbai through coastal ships or rail.

Ispat group, part of Global Steel, which has a 14 mt capacity worldwide, will take a partner for the pellet plant.

Business Standard
Ishita Ayan Dutt / Kolkata July 31, 2006

The Indian Steel Alliance (ISA), represented by Steel Authority of India (SAIL), JSW Steel, Ispat Industries, Essar and Rashtriya Ispat Nigam (RINL), has taken up Hooda committee’s recommendations on captive mining and iron ore export with the Prime Minister’s Office (PMO).

According to steel industry sources, the PMO has assured that it would re-examine the matter. A meeting was held recently. Simultaneously, ISA and the companies were making representations to the ministry of mines.

The steel companies were pressing for ban on iron ore export in a progressive manner. The committee has recommended that export duty be levied on exports of iron ore in lump form with iron content above 65 per cent.

According to the presentation made to the PMO, Ukraine, Russia, China, Kazakhstan and the US, had 60 per cent of the iron ore resources in the world and yet were not exporting any iron ore other than 45 million tonne transferred for overseas operations. India alone was exporting 90 million of iron ore with the lowest per capital resources.

Steel industry sources said iron ore resources had reached an alarming situation. “At the current rate of growth in the steel production and iron ore export, 13 billion tonne of haematite (62-65 per cent Fe) iron ore resources would be exhausted in the next 20 years,” they said.

Of the current production of 165 million tonne, more than 55 per cent of haematite ore was being exported and growing at the rate of 15 per cent annually.

The situation with magnetite (67-68 per cent Fe) ore was no better. Majority of the 10.68 billion tonne of magnetite ore was found mainly in western Ghats, which was ecologically sensitive and the Supreme Court had already stopped mining in the area.

The steel industry has also taken up the other contentious clause of captive mining with the PMO. The industry feels that all existing steel plants having a capacity of more than two million tonne should be given captive mines on priority.

The Hooda committee has recommended that steel capacities already in existence as on July 1, 2006 which do not have captive mines should be given preferential allocation of mines fully prospected by public agencies without the need for going through auction procedures.

However, the state could waive the auction for establishment of industry based on the mineral, if it wanted. The steel industry felt that the criterion for waiver was not clear.

If the state waived auction process for foreign steel majors, which were not in existence as on July 1, 2006, then the domestic steel players already in queue for the mines prior to their applications would not be done justice.

The Economic Times
REUTERS[ MONDAY, MAY 29, 2006 10:20:06 AM]

MUMBAI: The board of Indian steel maker Ispat Industries Ltd has decided to enhance its proposed foreign currency convertible bonds offering to up to $150 million from $125 million, the company said on Monday.

RAKHI MAZUMDAR

The Economic Times
TIMES NEWS NETWORK[ TUESDAY, APRIL 04, 2006 12:44:29 AM]

KOLKATA: Global Steel Holdings (GSHL), promoter of Ispat Industries, has appointed Lalit Kumar Sehgal as CEO of Zimbabwe Iron and Steel Company (Zisco). GSHL had acquired management control of Zisco last month.

Global Infrastructures, a subsidiary of GSHL, had entered into a deal with the Zimbabwe government for taking over management control of Zisco for 20 years. The company is estimated to have invested $400 million in Zisco.

GSHL has appointed Vilas Jamnis as CEO of its operations in Bulgaria. GSHL’s wholly-owned subsidiary Finmetal holds 71% in the country’s largest steel plant Kremikovski, located 20 kms from the Bulgarian capital city Sofia.

Mr Jamni had earlier held the position of COO of Ispat Industries’ plant in Dolvi, Maharashtra. Subsequently, he had moved to head global operations at GSHL.

Mr Sehgal joined GSHL after retiring from SAIL, where he worked at the public sector company’s Bokaro and Bhilai steel plants. He moves to Zimbabwe after his stint in Nigeria, where he was CEO of Delta Steel Company and prior to that in Ajakouta Steel.

Business Standard
Ishita Ayan Dutt & Our Bureau / Kolkata/ Mumbai March 14, 2006

After an increase in hot-rolled coil (HRC) prices a fortnight back, cold rolled (CR) and galvanised products are set to increase over the next two days by Rs 1,000-2,500 per tonne.

Uttam Galva Steels, the country’s second largest galvanised steel manufacturer, today announced an increase of Rs 1500 a tonne on prices of all its galvanised steel products.

The company has also increased prices across all its other product categories comprising of cold-rolled steel and steel by-products by Rs 2, 500 per tonne.

With the increase, the standard GC 40 grade galvanised steel is quoted at about Rs 38,000 a tonne, ex-Mumbai. Only about a fortnight ago, major galvanised steel producers had announced a price hike. Most of them, including Uttam Galva and JSW, had hiked prices by an about Rs 1,500 to Rs 2,000 a tonne.

Ispat Industries is considering a Rs 1,000 a tonne increase, effective March 16 across CR and galvanised products. Sources said the company could consider another increase of Rs 1,000 per tonne beginning April.

Jindal South West is also planning to increase prices by around Rs 1,000-1,500 a tonne over the next two days.

Seshagiri Rao, chief financial officer, Jindal South West said, the main reason behind the hike was good demand in the international market.

Galvanised product prices had increased by around $100 per tonne in the last 30 days and CR by $80-90 per tonne.

Rao said, Jindal South West’s pricing policy was to review HRC prices at the beginning of every month and CR and galvanising prices in tandem with market conditions.

The main reason behind the price hike was the galloping zinc prices, one of the key input materials. Zinc prices had scaled up to $2,500 a tonne compared with $800 per tonne only 14 months back.

Tata Steel, however, said the company was not considering any price hike.

CR and galvanised steel producers had staggered the price hike over the last few months. Mid-February, producers increased prices by around Rs 1,500 a tonne.The average galvanised prices was at Rs 35,000 per tonne.

The CR and galvanised price increase came after the HRC price rise. At the beginning of March, steel majors—long and flat product manufacturers—raised HRC prices in the range of Rs 500-2,000 a tonne, on the back of a firm-up of demand in the domestic and international markets.

India produces about 4 million tonne and consumes about 1.5 million tonne of galvanised steel. In the recent past, steel mills around the world added new capacities in a big way to meet the anticipated rise in demand in the near future.

The Hindu Business Line
March 10, 2006

Ispat Industries Ltd. has decided to raise $125 million through the issue of Foreign Currency Convertible Bonds (FCCBs).

At the meeting held on Wednesday, the board approved the proposal for raising the amount by way of FCCBs, subject to requisite approvals, the company informed the Bombay Stock Exchange.

Business Standard
Prince Mathews Thomas / Mumbai March 08, 2006

Ispat Industries earlier this week conducted a successful trial run of its ramped-up 3.45 million tonne capacity expansion in Divoli plant in Maharashtra.

The unit is expected to commence commercial production “very shortly,” said a source from the industry.

The company had implemented the Rs 1,100 crore expansion plan in phases: from 2.4 million tonne per annum (mtpa) to 3 million and later to 3.4 million tonne per annum. This week’s trial run marks the completion of its expansion to the 3.45 mtpa level.

As part of the plan, Ispat has also commissioned a 2.24 mtpa sinter plant at the Divoli facility. This is the company’s first sinter plant.

Moreover, another facility - a 1,260 tonne a day oxygen plant - has also been commissioned.

“Both the facilities are a first for the company. Earlier oxygen was sourced from outside. Along with the sinter plant, the oxygen unit will reduce the company’s cost of production by 10 per cent,” said the source.

Apart from the new facilities, Ispat has one blast furnace and an electric arc furnace. It is claimed to be the only steel company to have both kinds of furnaces, enabling Ispat to use varied types of raw materials including scrap and pellets. Ispat also has a sponge-iron plant.

In a related development, Ispat has increased prices of its hot-rolled oils by Rs 2,000 a tonne. This follows the price hiked by other major steel manufacturers last week.

“Internationally too, there has been an increase in the steel prices in the US, Europe and Chinese markets by about $50 per tonne. This trend is expected to continue for another sox months,” said the source.

The price hike and the reduction in manufacturing costs with the coming up of new facilities, is expected to prop up the company’s margins.

Last week, Ispat’s holding company, Global Steel Holdings, had signed a 20-year management contract with the Zimbabwe government to upgrade and operate Zimbabwe Iron and Steel Company.

Business Standard
Kausik Datta & Prince Mathews Thomas / Mumbai March 04, 2006

Global Steel inks 20-year contract with Zimbabwe to run Ziscosteel.

Global Steel Holdings, a special purpose vehicle of Pramod Mittal and Vinod Mittal, has signed a 20-year management contract with the Zimbabwe government to upgrade and operate Zimbabwe Iron and Steel Company (Ziscosteel).

The development comes even as brother Laxmi Niwas Mittal, the world’s largest steel maker, is busy lobbying hard among Europeans for his bid to take over competitor Arcelor.

Global Steel has agreed to inject $ 400 million (close to Rs 1,800 crore) to restructure the Zimbabwe company, sources close to the development said. Global Steel is the holding company of Ispat Industries.

Zimbabwe Central Bank Governor Gideon Gono announced the contract on Wednesday at a briefing attended by Zimbabwe government and Global Steel officials in Harare. “Global Steel would inject foreign currency for rehabilitation of Ziscosteel plant components,” he said at the briefing

Sources said Ziscosteel was the main foreign currency earner for Zimbabwe prior to its independence from Britain in 198O. But since the 1990s, the company has been plagued by lack of capital to requip its plant and its annual production plummeted to nearly 80,000 tonne.

Sources said Global Steel would get a royalty payment for the management of Zisco. They, however, declined to divulge further details.

The agreement, one of the biggest foreign investments in recent years in Zimbabwe, would boost Ziscosteel’s annual production to over one million tonne. The production would grow 17 times by the end of the 20-year contract period.

Ziscosteel, the only steel company of Zimbabwe, has a steel mill, power plant, cokery and coal mine. The company produces billet, rebar and medium sections and will remain in government hands for the period of the contract.

The agreement is significant for the southern African country, which has been struggling to get out of economic and political crises. Zimbabwe had earlier identified Ziscosteel among underperforming state companies to be privatised to revive its ailing economy.

Global Steel Holdings, which had taken full control of Ispat Industries in September last year, has assets of about $7 billion.

- By Xinhua

Asian Age
March 4, 2006

Harare, March 3: Indian steel company Global Steel Holdings Limited (GSHL) will invest over $400 million in the Zimbabwe Iron and Steel Company (Ziscosteel), The Herald reported Friday.

GSHL, which boasts of a capital base of $8 billion, will receive a concession to operate the refurbished assets and manage the entire operations of Ziscosteel for a 20-year concession period, after which the management control will revert to the Zimbabwean government, which is the majority shareholder.

"An attraction to this transaction was the integrated nature of the intervention for the peripheral infrastructure establishments," Zimbabwe Reserve Bank governor Gideon Gono said on Thursday.

The development will see Ziscosteel, which has over the years struggled to meet local demands, refurbishing its plant and equipment including the mini-power station in Redcliff.

Ajoy K Das

DNA
Wednesday, March 01, 2006 22:06 IST

KOLKATA: Biting the bullet of lower customs duty, Indian steel producers will hike prices selectively on Thursday, anticipating a demand push by the budget and emboldened by lower production and rising prices in China.

The price increase of Rs 1,500-2,000 per tonne on hot rolled (HR) coils will be the first hike in steel prices in the last six months. According to a PTI report, Tata Steel and JSW Steel have already announced the price increase, effective from Thursday.

Most integrated steel producers like Tata Steel, Steel Authority of India Ltd (SAIL), Ispat Industries Ltd and JSW Steel Ltd held day-long meeting of their pricing committee. Sources said that most producers were very cautious on the new pricing strategy, unsure as they are of the market’s ability in absorbing a higher price and also the rather tentative recovery of international prices.

Hence, prices of hot rolled (HR) coils would be increased by producers by Rs 1,500-2,000 per tonne, depending on various grades, but prices of cold rolled (CR) prices would be maintained.

Sources in Tata Steel and SAIL said that prices of CR coils were already too high and since a differential had to be maintained between HR and CR, the prices of the latter will remain the same. JSW Steel Ltd, too, would raise prices of HR coils by a similar amount.

“We have seen a recovery in demand across the Asian region and expect prices to remain buoyant,” T Mukherjee, deputy managing director, Tata Steel, said.

“Also, Chinese companies will maintain prices since they suffered huge losses in the last quarter from rising cost,” Mukherjee said.

“This is basically opportunistic pricing. Domestic demand is firm and production has been lower in China because of the New Year there. Chinese export price, too, has moved up.

So too have prices in North America and Europe. Indian producers are taking advantage of short-term spikes in steel prices,” said an official in Tata Steel.

DNA Money had reported on February 27 that Indian steel producers were likely to increase prices, taking advantage of the modest hardening of prices in western markets and an increase in steel export price in China.

However, the quantum of the current hike may have been capped by the budget, which cut customs duty on alloy steel to 7.5% from 10% and maintained duty on primary steel at 5%, despite pleas of a hike from the producers. In the current fiscal, imports of flat steel was up by 90%, at around 3.12 million tonnes.

Domestic integrated steel producers like Tata Steel and SAIL reckon that the excise duty cut on small cars to 16%, and the large budget allocation for the infrastructure sector would fuel a higher demand for steel.

The Economic Times
PTI[ TUESDAY, FEBRUARY 28, 2006 08:17:14 PM]

NEW DELHI: The country's major steel players today welcomed the Union Budget proposals for the fiscal 2006-07 with some hailing it as growth-oriented while a major player said the budgetary proposals fell "far below expectations".

"I am firmly of the view that the change should not be made for the sake of change and I feel this budget will provide stability. The corporate and the personal tax rates have not been changed and no new taxes have been introduced.

While we have yet to assess the full impact of the Budget, it appears arginally positive fro the steel sector with the reduction in peak customs duty on non-ferrous metals, ferro alloys, refractories and on minerals and simplification of FBT," Tata Steel Managing Director B Muthuraman told PTI.

"However, my view on MAT remains as before; there should be no tax, if by provisions of law, a corporate is not liable for tax otherwise," he pointed out and added that "we see this budget as a step towards facilitating the economic growth in the country as rank it 7.5 on a scale of 10".

However, Essar Steel is not happy with the budgetary proposals.

"The steel sector welcomes the duty corrections in the range of 2.5 to three per cent on iron ore, zinc etc, but the rate cuts are far below our expectations and will have only a marginal impact on our costs," Essar Steel Managing Director Prashant Ruia said when asked to comment on the Budget 2006-07

Managing Director, Ispat Industries Vinod mittal said the budget was certainly growth-oriented with special focus on rural development. The reduction in central excise on small cars from 16 to eight per cent will bring down the car prices thereby boosting steel demand.

Ispat Industries Limited has been awarded the "Golden Peacock Award" for Corporate social Responsibility 2005 by the award jury under the chairmanship of justice P.N. Bhagwati, former chief justice of India in the category of private sector. The Award instituted by the Institutes of Director, New Delhi is based on the pattern of Malcolm Baldrige Awards in US for outstanding achievements.

Business Standard
Dilip Kumar Jha / Mumbai February 24, 2006

Uttam Galva, JSW and Ispat expect surge in demand from construction industry.

Anticipating huge demand from the construction industry, galvanised steel producers have raised their basic selling prices with effect from February 22, retrospectively.

Leading the pack, Uttam Galva Steel has raised the selling prices of its products by Rs 2,500 a tonne across all varieties. With this hike, the standard GC40 grade galvanised steel is quoting at Rs 36,500 a tonne, ex-Mumbai (freight rate extra for ex-Delhi).

Unconfirmed sources said JSW Steel has also raised the prices of its products between Rs 250 and Rs 1,750 a tonne depending upon quality of output.

Ispat Industries, another galvanised steel producer, too has decided to increase its prices in the range of Rs 1,500-1,800 a tonne across all categories effective from March 1.

Galvanised steel producers largely attribute the current price hike to squeezing of their margins owing to a spurt in production costs.

“Costs of raw materials have gone up substantially. Sharp rises in fuel and zinc prices, coupled with rising freight rates due to the recent Supreme Court directive on loading not more than 9 tonne on a truck, were squeezing our margins. So, we have decided to hike prices, justifiably,” said Ankit Miglani, director, Uttam Galva Steel.

Construction activities in the country are slowly picking up, and the demand for galvanised steel and carbon steel is increasing slowly but steadily.

However, carbon steel prices have remained stagnant for quite some time in the domestic market, and this trend is expected to continue at least till the Budget, experts said.

Given the scenario, this price rise in galvanised steel is justifiable, but it is not timely, an analyst said. The domestic galvanised steel producers are trying to move in tandem with the steel companies in neighbouring countries like China.

Steel mills in China are all set to hike their selling prices by 10 per cent after experiencing a nine-month deflationary spiral. In fact, the Chinese steel industry was open to raising prices to the tune of 20 per cent which, it said, was quite justifiable.

But, as inventory started piling up on the back of recent expansion in steel capacity, it restricted the raise to 10 per cent only, another analyst said.

India produces about 4 million tonne and consumes about 1.5 million tonne of galvanised steel. In the recent past, steel mills around the world added new capacities in a big way to meet the anticipated rise in demand in the near future.

But, demand has not peaked up as per their expectations, which has resulted in stockpiles and declining prices, the analyst added. 

Business Standard
Our Corporate Bureau / Mumbai February 09, 2006

Cabinet has approved new steel policy, says Paswan.

Steel companies have reacted strongly to the minister of steel Ram Vilas Paswan’s statement that the government will regulate metal prices through the new policy. “It’s not possible as the new steel policy doesn’t mention any measure to control prices,” said an official of a steel major.

“Steel companies follow market dynamics. The government had also reduced import duty on steel from 30 per cent to 5 per cent over the last two years. So how can prices be regulated,” he said.

Ispat’s spokesperson said, “Prices are already at a two-year low, and has come down by 35 per cent since May 2005. Steel prices are benchmarked to international prices. The only way to bring down prices is to make Indian steel competitive price-wise. For that input prices need to be checked.”

Paswan was quoted as saying that the draft of the new steel policy, aimed at regulating prices, has been approved by the Union Cabinet. The government will soon announce the new steel policy to regulate prices, which have been volatile due to domestic factors and the international price situation.

Price of iron-ore, the main raw material in steel production, have increased from Rs 816 to Rs 2,000 per tonne. Steel producers should be given captive iron-ore mines to make steel more cost-effective, the spokesperson said.

An industry insider echoed the view, saying, “Tata Steel and SAIL have their own captive mines. What about other players which have to pay for raw materials. Controlling steel prices is not possible unless you have a regulator for this.”

The ministry has set a target to increase steel production from the current 38 million tonne to 110 million tonne by 2020 by investing a further Rs 1.60 lakh crore in production, Paswan said.

On the uncertainty in steel prices, Paswan said since large quantities of the 38 million tonne was being produced by private operators, it was difficult to regulate the prices.

Moreover, with steel being de-controlled by the last BJP government, international prices were also making import prices uncertainty.

SURESH NAIR

The Economic Times
TIMES NEWS NETWORK[ WEDNESDAY, FEBRUARY 08, 2006 02:09:44 AM]

MUMBAI: As part of its pre-budget recommendations, the Indian Steel Alliance (ISA), an association of steel producers comprising Essar Steel, JSW Steel, Ispat Industries and Steel Authority of India (SAIL), have asked finance minister P Chidambaram to raise import duty from the current 5% to 15%.

They have also sought reduction in excise duty for steel used in the construction industry to 8%. Customs duty is currently at 5%, which is below the Asean level of 8%, that was to be achieved by ’07-08. Hot rolled coil prices have fallen to $450 per tonne against $650-700 a year ago.

Downstream product prices, like that of cold rolled coils, have also reduced by $80-100 to around $520 per tonne. Galvanised steel manufactures have been worst hit as the price of zinc, a key input, has increased exponentially.

Between January 1 and 31, zinc prices rose by over $120 to $2,325. This has eroded the margins of galvanised steel manufacturers. The steel industry is expecting customs duties on zinc to be reduced to at least 5% from current level of 10%.

However, help from the finance ministry may be hard to come by as the steel ministry does not seem to be very sympathetic to the industry. Industry officials said the steel ministry has not recommended any customs duty hikes to the finance ministry.

The steel ministry is of the opinion that the input cost of the steel industry has also come down with prices. Industry officials, however, do not agree.

According to an official at a Mumbai-based steel manufacturer, the cost of iron ore has increased almost three-fold from Rs 860 per tonne to over Rs 2,250 per tonne. But he agreed that coke prices have reduced by half to Rs 9,000 per tonne.

The ISA feels that rising imports from Ukraine and Russia and soaring domestic production in China are good reasons for Indian players to worry about the continued pressure on the price of finished steel.

According to official figures, the net imports of steel between April and December ’05 have already crossed 3.5m tonnes, or roughly 10% of the total annual domestic production.

Imports from Ukraine and Russia have gone up by as much as 120% in ’05. “With global steel prices under pressure and China being a net exporter of more than 100 mt, the Indian steel industry is entitled to some protection by the government.

“The ISA hopes that customs duty will be hiked to 15%, while excise duty will be reduced to at least 8% to provide relief to the construction industry,” said ISA president Moosa Raza.

With regard to monitoring of import of seconds and defectives, Mr Raza said, “We would like to suggest a model akin to that of Thailand. The definition for seconds and defectives finalised by the steel ministry should be recommended to the finance ministry for inclusion in the budget proposals.”

The industry is also expecting some concessions on import of equipment used in steel manufacturing as a number of steel projects are being planned.

Industry officials are of the opinion that this will go a long way in reducing the project cost. The steel industry has seen the largest foreign direct investment (FDI) promises, with multinational companies like Posco and Mittal Steel announcing mega projects in Orissa and Jharkhand respectively. MoUs for over 100 mt of capacity addition have been signed.

The industry has seen a growth rate of over 7% in the current fiscal, with production expected to be around 42 mt this fiscal. The government has also announced a national steel policy envisaging a future capacity of 110 mt by ’20.

However, steel manufacturers who had been earning record profits are now seeing a decline in their profits as a result of reduced prices.

Industry officials said that if the objectives of the national steel policy are to be met, the government will have to see to it that the industry is able to sustain its profitability so that capacity expansion projects can be implemented on time.

January 2006

Business Standard

S Kalyana Ramanathan / New Delhi January 27, 2006

The Indian Steel Alliance (ISA) is seeking the government’s protection from the rising steel imports to the country. It has sought an increase in the import duty, from the current level of 5 per cent to 15 per cent.

According to ISA - a consortium of Indian producers such as Essar, Jindal and Ispat - rising imports from Ukraine and Russia and the rising domestic production in China are good reasons for domestic players in India to worry about the continued pressure on the price of finished steel.

According to government sources, net import of steel between April-December 2005, has already crossed 3.5 million tonne, or roughly 10 per cent of the total domestic production in India on an annual basis.

By the close of three quarters in the current financial year, steel imports have already crossed the 2.5 million tonne imports during the whole of the year 2004-05.

According to government sources, increasing imports from CIS countries is partly due to the change in the dynamics of the world steel market, triggered partly by some changes in China’s steel import policy. With rising domestic production, China has created artificial blocks on imports from CIS countries, allowing the excess capacity in countries such as Russia and Ukraine, to reach common markets that have found their way into India.

“Imports from the CIS countries have gone up by as much as 120 per cent in 2005. Apart from Russia and Ukraine, we are also witnessing new players from Egypt and Iran too, exporting steel to India. Even China has turned a net exporter of steel, as far as India is concerned,” said a senior official at ISA.

China’s ever increasing capacity of steel production is also expected to reach new heights in the current calendar year. From a total production 349.4 million metric tonne in 2005, the excess production (over domestic demand) in 2006 in China is expected to around 116 million tonne.

In 2005, China contributed close to 31 per cent of the total steel produced in the world, which stood at 1129 million tonne.

While plans are afoot in China to create fresh capacity by closing existing small and inefficient mills, the rising rate of production continues to worry smaller players such as India, who play in the world steel market.

According to ISA officials, domestic steel prices slipped by as much as 30 per cent since April 2004. The effect of price erosion of this magnitude has already started showing on the quarterly results of Tata Steel, which reported a 15-per cent drop in net profit in the third quarter.

The Financial Express

KAILASH RAJWADKAR

Posted online: Tuesday, January 03, 2006 at 0143 hours IST

MUMBAI, JAN 2: Zinc is the new mineral to add to the woes of steel industry, after the availability of iron ore and coal has been widely debated. The soaring zinc prices is pinching the galvanised steel producers following an almost 85% increase in zinc prices in the last one year.

Moreover, this has happened at a time when prices of galvanised products have seen almost 30% fall in the last 9 months or so. Galvanised steel prices across the world has fallen in line with the fall of HRC prices, officials at Ispat Industries said.

According to Bhushan Steel & Strips chief financial officer Nitin Johari, “The effect of these soaring prices is reflecting on our cost and in the present scenario we cannot increase the prices of galvanised products.”

Zinc is a high-cost raw material used to make GP/GC sheets and plates. Like steel, domestic prices of zinc is benchmarked with international prices.

While international steel prices have seen a fall of over 30-35% in the last nine months, prices of raw material like zinc in the spot market of LME has increased by 87% to $1813 per tonne in December 2005 from $969 per tonne in September 2004.

While we try and hedge zinc prices; sustained increase in zinc prices over the past one year has been a difficult proposition to counter the cost push, Ispat officials said.

In fact, end users of zinc point out that while overseas suppliers like Glencore etc are at least giving the committed quantity; one of the largest domestic supplier is not even giving that.

As a result, cost of zinc as an input has increased from Rs 2,000 per tonne to about Rs 4,500-5,000 per tonne for every tonne of steel produced, contributing to almost 15% of cost of production of GP/GC sheets, sources said.

“We wish we could have stopped the sales of galvanised steel products. But if the zinc prices continue to rise further, may be all galvanisers would have to reduce production to the extent possible,” Mr Johari said.

The annual consumption of zinc at Bhushan steel is almost 30,000 MT and galvanised products forms approximately 30% of the company’s production volumes. Ispat consumes about 20 tonnes (20,000 kg) of zinc annually for its 4 lakh tonnes annual galvanising capacity.

The lowering of import duty on zinc could be the silver lining. However, it is currently inconsistent in line with the harmonised tariff structure. Import duty of zinc is 10% along with a 2% cess, while that of finished steel is only 5%, sources said.